Contract extended 30 days as port strike is averted

Published December 29. 2012 12:01AM

By STEVEN GREENHOUSE New York Times

Publication: The Day

A top federal mediator announced Friday that shipping companies and the East Coast longshoremen's union have reached a deal on their main point of dispute and that the union has agreed to drop its threat of a coastwide strike this Sunday.

The mediator said the two sides have agreed to extend the existing contract by 30 days, to Jan. 28, to try to reach agreement on other remaining issues, including what the companies say are antiquated work rules.

The partial agreement means that the union, the International Longshoremen's Association, will not carry through on its threat to have 14,500 dockworkers go on strike this Sunday at 14 ports stretching from Boston to Houston.

"While some significant issues remain, I am cautiously optimistic that they can be resolved in the 30-day extension period," said the mediator, George H. Cohen, the director of the Federal Mediation and Conciliation Service.

In a news release, Cohen said the two sides had reached an agreement in principle on a particularly contentious issue, known as "container royalty payments."

The companies share those payments with union members for each ton of cargo handled. The union had for months denounced the companies' proposal to freeze those payments for current longshoremen and eliminate them for all future hires.

The United States Maritime Alliance, a group of shipping companies and terminal owners, says it paid $211 million in container royalties to the dock workers last year, averaging $15,500 per eligible union member.

James A. Capo, the alliance's chairman, said the royalty payments amounted to $10 an hour on top of what he said were already generous wages.

"This issue seems to have dwarfed anything else," Capo said in an interview this week.

The maritime alliance said the longshoremen earn $124,000 a year on average in wages and benefits, including the royalty payments. Union officials said those figures were exaggerated and put average annual wages at $75,000 before benefits. Under the current contract, most longshoremen earn $32 an hour.

The container payments were created in the 1960s to compensate the longshoremen because many lost their jobs as seaports embraced automation and the use of standardized, 40-foot-long containers to ship goods. Largely as a result of those trends, employment of longshoremen in the Port of New York and New Jersey, the busiest East Coast port, has dropped to 3,500 from 35,000 in the 1960s.

The shipping companies see the royalty payments as a relic of decades past. The union still sees the payments as a core part of wages and as an important way to share productivity gains with members. The payments come to $4.85 a ton, the union said.

Harold Daggett, the union's president, resisted the push by the shippers' alliance, known as USMX, to freeze the royalty payments. As the strike deadline approached, he said, "USMX seems intent on gutting a provision of our master contract that ILA members fought and sacrificed for years to achieve."